Internal Control and Compliance - Management assessed the effectiveness of internal control over financial reporting as effective as of November 3, 2023[15]. - A material weakness in internal control was identified at the end of fiscal year 2022, related to lease term reporting[44]. - Remediation steps included quarterly verbal communication with plant managers and expanded notifications to the Operating Committee[45]. - No changes in internal control over financial reporting occurred during the last quarter of fiscal year ended November 3, 2023, that materially affected controls[16]. - The company centralized most accounting and administrative functions to control costs of maintaining control systems[12]. - Disclosure controls and procedures were evaluated as effective as of the end of the reporting period[38]. - The Audit Committee regularly meets with financial management and independent registered public accounting firm to discuss internal controls[43]. - As of November 3, 2023, the company has remediated material weaknesses in internal controls, but future compliance with Section 404 of the Sarbanes-Oxley Act remains uncertain[46]. Financial Performance - Net sales in fiscal year 2023 decreased by 15,646 (7.5%) in net sales[130][155]. - The Frozen Food Products segment experienced an increase in net sales of 12,558 (6.5%) during fiscal year 2023, while the gross margin increased from 27.1% to 28.0%[157]. - Selling, general and administrative expenses (SG&A) increased by 1,021 for fiscal year 2023, significantly lower than the 14,638 (9.6%) due to lower unit sales volume[177]. Debt and Financial Obligations - The company has no other debt or contractual obligations as of November 3, 2023[29]. - As of November 3, 2023, total long-term debt was 3,824 in the previous year[170]. - The company has a new revolving line of credit allowing borrowing up to 1,044 million, increasing to 1,124 million in 2026, and decreasing to 18,653 million in equipment loans using proceeds from a new bridge loan[195]. Market and Operational Insights - The company operates in two business segments: processing and distribution of frozen food products and snack food products[67]. - The company has not entered new markets or significant contractual relationships during the last fiscal year[56]. - The company plans to shift from company-leased long-haul vehicles to less costly transportation methods, enhancing operational efficiency[59]. - The company has focused on developing new products, particularly single-serve items, to complement existing product lines[76]. - The company’s advertising strategy includes social media presence and participation in trade shows to reach food service customers[72]. - The company’s products are distributed through various channels, emphasizing relationships with large food service distributors[57]. - The company has maintained a competitive edge through careful research and testing of products to ensure quality and market fit[76]. - The company has not been involved in any mergers or acquisitions in the past five years, maintaining a stable operational structure[55]. - Sales to Wal-Mart® comprised 29.1% of revenues in fiscal year 2023, with 26.5% of total accounts receivable due from Wal-Mart® as of November 3, 2023[80]. - Sales to Dollar General® accounted for 16.3% of revenues in fiscal year 2023, with 20.5% of total accounts receivable due from Dollar General® as of November 3, 2023[80]. - The company sold approximately 160 different snack food items through a direct-store-delivery network serving around 20,000 retail stores across 50 states during fiscal year 2023[103]. - The frozen food products division serves both food service and retail customers, selling approximately 140 unique products through about 780 wholesalers and distributors[99]. Labor and Regulatory Challenges - Labor shortages and increased turnover rates have led to higher costs, including increased overtime and wage rates, which could negatively affect operational efficiency[89]. - The company is subject to extensive inspection and regulation by the USDA and FDA, ensuring compliance with safety and sanitary operating procedures[116]. - Approximately 44% of the company's 688 employees are governed by collective bargaining agreements, which may affect labor costs and operational stability[109]. - The company has experienced a decrease in sales to key customers due to increased buying power and consolidation in the retail sector, potentially affecting profitability[119]. - Future volatility in commodity prices and labor costs may adversely affect the company's financial results and operational performance[115]. - Commodity prices for pork, beef, and flour have fluctuated significantly, impacting profitability and operational costs due to external market forces[86]. Shareholder Information - The company has 969 shareholders of record as of January 11, 2024[127]. - The company did not repurchase any shares of common stock during fiscal years 2023 and 2022, with 120,113 shares remaining authorized for repurchase[150]. - As of the end of fiscal year 2023, 120,113 shares remained authorized for repurchase under the stock repurchase program[190]. Cash Flow and Financial Ratios - For the fifty-three weeks ended November 3, 2023, net cash provided by operating activities was 11,815 compared to the previous fiscal year[184]. - The net income for the same period was 6,480[184]. - The cash conversion cycle was 83 days for both the fifty-three weeks ended November 3, 2023, and the fifty-two weeks ended October 28, 2022[166]. - The company did not contribute to its defined benefit pension plan during fiscal years 2022 and 2023[184]. - The company’s Quick Ratio is required to be not less than 1.25 to 1.0 at each fiscal quarter end[196]. - The Fixed Charge Coverage Ratio must not be less than 1.25 to 1.0 at each fiscal quarter end[196].
Bridgford Foods (BRID) - 2023 Q4 - Annual Report